What if price-matching schemes were anti-competitive?

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Sainsburys aldi price match aisle

As he was quizzed by MPs on the Business & Trade Committee this week, Morrisons CEO David Potts admitted there was “more profit at the retail end of fuel”. And he vowed: “We can do more.”

Supermarkets are already doing more. Funnily enough, since the Competition & Markets Authority vowed to investigate fuel prices last month, the “sustained higher margins on diesel compared with petrol” have closed.

The question now, with the CMA’s report out next week, is whether supermarkets will be prepared to lower margins overall. Its initial research found average 2022 supermarket pump prices were 5p a litre more than had they maintained margins at 2019 levels.

But as angry as it is, unless the CMA has found evidence that supermarkets have colluded to up their margins, nothing can compel them to lower them. So it’s hoping supermarkets will share local fuel prices on a comparison website to increase transparency and with it competition, a move that’s certainly worked in Northern Ireland, where the prices of petrol and diesel are 8.5p and 10p cheaper. Supermarkets have welcomed the recommendation. Although what else would they say?

Not surprisingly, the CMA is looking further afield. It needs to show it’s doing its job after an IMF report this week put the blame for inflation on corporate profits. And it’s gathered a dossier of evidence from a raft of sectors.

Of these the most intriguing possibility is investigating the various Aldi price matches. Until the committee meeting this week, concerns to date have focused (under the watch of the CMA’s Grocery Adjudicator) on its use to prevent suppliers from receiving price increases. So it would be quite a turn-up for the books if it worked as an anti-competitive measure in the other direction.

It’s the sort of classic theory of harm economists at the CMA come up with. Whether it amounts to anything is another matter. And other than fuel prices, the CMA doesn’t have an investigation. It’s in information mode. The most likely report it will issue next week would be a placeholder type report. Unless it knows something we don’t, of course.